British Airways report losses of £164m

This morning British Airways (BA) announced a loss of £164m for the three months ending 30 June 2010. Nick Raynor, investment adviser at The Share Centre explains what this means for investors.

"It has been a tough quarter for the airline, although BA is confident it still expects to break even for the full year.  Strike action and the ash clouds have had a big impact on revenue which has dropped by £46m.  BA also attributed the loss to additional finance costs.  Despite the loss these results for the quarter are better than some expected.

"Although passenger revenue fell 3.4%, BA pointed out that without the disruptions it would have increased 11% year on year.  Positive further news is that revenue made per passenger per mile increased 12.7% as costs reduced.

"Investors should be aware that staff action will continue to prove challenging. Last week Unite rejected BA's latest offer, raising the prospect of further industrial action.  It is important to note that the strike action, whilst impacting the bottom line, is also damaging the reputation of the airline which is not good for a company of BA's standing.

"However, investors in it for the long haul should follow BA's clearance to work with American Airlines in an open skies policy plus the Iberia merger.  Both ventures could result in further cost cutting and a quicker return to profitability.

"If BA can resolve its problems it will be heading in the right direction, and may become an attractive prospect but for now we recommend holding the shares."